Hospital Might Drop Hmo Plan

Children's Hospital Says It's Losing Money

Children's Hospital of The King's Daughters intends to stop taking patients from UnitedHealthcare unless the health-care giant agrees to significantly better terms by next week, hospital officials said Friday.

Children's Hospital negotiates for about 200 doctors and owns the practices of about 78 of those doctors, including primary-care doctors and surgeons. The contracts governing doctors' payments expire Feb. 29.

Minnetonka, Minn.-based UnitedHealthcare received positive publicity recently by announcing a policy of letting doctors in its health maintenance organization make treatment decisions without review by the HMO.

But in Hampton Roads, at least, flexibility alone won't be enough to attract and keep doctors.

Children's Hospital officials say UnitedHealthcare pays doctors less than other insurers. A letter received by parents this week from one of the hospital's group practices said reimbursement rates in many cases don't cover overhead expenses.

Communication has been another weak point, the letter said.

Nearly 500 Hampton Roads children could be affected if an agreement isn't reached. That's a small percentage of those using the hospital because UnitedHealthcare's presence in Hampton Roads is small.

But for those affected, the effect is serious.

Renee Bevan's son receives cancer and neurological development treatment at Children's Hospital, specialties she said are unavailable at other Hampton Roads hospitals. Her 9-year-old son, John, was born with leukemia and lost his sight from a complication with the disease.

The Smithfield woman will be able to switch her family to the insurance her husband has through his employer. But she works with single mothers at Chase Manhattan Mortgage Corp. in Newport News who won't have an alternative to UnitedHealthcare.

Lawrence Bates, vice president of planning and system development for the Norfolk hospital, said the hospital would try to find ways to work with people like the Bevans on a case-by-case basis.

Some children from low-income families may be eligible for a federal program that's intended to help children whose families don't qualify for Medicaid but can't afford private insurance.

Bates said UnitedHealthcare will have to give a lot of ground fast. The two sides negotiated for more than a year without significant progress.

"We have got to have a decision by the Thanksgiving break," Bates said. "I think the chances are still good we will terminate, but I am leaving the door open."

Tim O'Shea, the new CEO of UnitedHealthcare's Virginia subsidiary, said he thought there was still room for negotiation.

O'Shea acknowledged that UnitedHealthcare may need to increase its reimbursement rates to be competitive in Hampton Roads, where the health-care company plans to make an aggressive push.